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Shanken Corp. issued a 30-year, 9 percent semiannual bond 3 years ago. The bond currently sells for 106 percent of its face value. The company%u2019s tax rate is 34 percent. The book value of the debt issue is $24 million. In addition, the company has a second debt issue on the market, a zero coupon bond with three years left to maturity; the book value of this issue is $76 million and the bonds sell for 78 percent of par.
1) What is the company total book value of debt?2) Calculate the total market value.3) What is your best estimate of the aftertax cost of debt?
Evaluate ABC cost of equity capital by using the market risk premium of 3.5%. What is firm's WACC under each of 2 suppositions about market risk premium.
Marion Chemicals produces a chemical used as a base in paints. In the process, all materials are added at the start of the process,
Preston Inc.'s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return?
Steinberg Corporation and Dietrich Corporation are identical firms except that Dietrich is more levered. Both companies will remain in business for one more year. Supposing there are no costs of bankruptcy, what is the market value of each firm's d..
In 2012, average vehicle in US sold for $42,830. In 2002 the average selling price was $25,313. Calculate the annual increase in the selling price over this time period?
In 2007, Apple had cash of $7.12 billion, current assets of $18.75 billion, current liabilities of $6.99 billion, and inventories of 0.25 billion.
A new blast furnace delivered in one year. the value $1,000,000 for furnace is due in one year. a discount of $50,000 is payed now and an interest rate of 7 percent calculate the NPV.
Blackstone Corporation's $7 preferred was issued five years ago. The risk-appropriate interest rate for the issue is currently 11%. What is this preferred stock selling for today?
Florida. Stan sells his cans for $8 a piece and they have a variable cost of $2.40 a piece. Stan's tax rate is currently 34%.
If EBIT is $750,000, which plan will result in higher EPS?
Discuss the major capital budgeting methods used by corporations to evaluate projects. Why do many corporations continue to use the payback period method? Which method do you prefer? Explain why you prefer this method.
Ambrose Industries stock has an average expected rate of return of 13.6% and a standard deviation of 11.8%. What is the probability the stock will lose money more than 10% in any one year?
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